When a country allows trade and becomes an exporter of silk, which of the following is not a consequence?

A) The price paid by domestic consumers of silk increases.
B) The price received by domestic producers of silk increases.
C) The losses of domestic consumers of silk exceed the gains of domestic producers of silk.
D) The gains of domestic producers of silk exceed the losses of domestic consumers of silk.

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Brina’s World · Accepted Answer

Final Answer : C, Explanation :  When a country becomes an exporter of silk, it indicates that the domestic market is efficient enough to produce silk at a lower cost than the world market. This leads to an increase in the price received by domestic producers (as they can now sell at higher world market prices), and while domestic consumers may pay more, the overall gains in producer surplus often exceed the losses in consumer surplus. Thus, the statement that the losses of domestic consumers exceed the gains of domestic producers is not a consequence of becoming an exporter.

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